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E-Trade vs Robinhood

If you’re comparing veteran online brokerage E-Trade to newcomer Robinhood, it’s hard not to make clichéd sports references. The scrappy newcomer takes on an experienced champion: it sounds like the plot of a Disney movie, but these two firms really do fit the bill.

E-Trade is one of the oldest online brokerages operating today. In 1982, the company was a two-man startup with nothing but dreams, ideas and $15,000 in the capital. But humble beginnings didn’t stop E-Trade, and it quickly established itself as an authority. E-Trade currently manages over $63 billion in assets and employs 3,600 people.                                    

Robinhood takes a different approach. The company has no physical locations and no sales representatives or in-house financial advisors but does offer an advanced web and mobile platform. It offers analyst rating, company data, and allows you to view stocks based on sectors and other curated categories. The best part: Robinhood is completely free of charge for every user who signs up for his or her basic account. Free is something a big, entrenched company like E-Trade can’t match.

Commissions

$6.95 for fewer than 30 trades/quarter.

Best For
  • Mobile traders
  • Traders looking for research and data
  • Investors looking for retirement planning guidance
Commissions

Free

Best For
  • Low cost stock trading
  • Beginners looking to start trading
  • Investors on the go

What is E-Trade?

E-Trade was one of the first brokerages to embrace the internet age and build web-based tools. The company began as TradePlus and extended its first online services through internet providers like CompuServe and America Online. After its initial $15,000 capital infusion in 1982, E-Trade grew rapidly, adding 73,000 customers by 1996, and annual revenue grew close to $60 million. An initial public offering also came in 1996, but the company saw a steep revenue decline after the bursting of the dot-com bubble. By 2002, E-Trade’s stock price dropped from $63 to $8.

Unlike many online peers at the time, E-Trade survived and thrived following the dot-com crash and recession. Today, the company hosts 3.6 million brokerage accounts on its network of web and mobile platforms. There are three different ways to trade on E-Trade:

1. OptionsHouse

A slick piece of trading software that gives users advanced analysis and research tools, you can use your own indicators to create stock charts and select from dozens of investment strategies on OptionsHouse – free for all E-Trade users.

2. Web

The standard trading platform for most users, you’ll have streaming market data available at your fingertips, along with custom stock screeners and analytical research from multiple sources.

3. Mobile

E-Trade’s mobile app is compact and easy to navigate. Plus, most of the research tools from the web platform are available here.

Read Benzinga’s full E-Trade Review

What Is Robinhood?

Robinhood offers a platform aimed at millennials and younger investors. There aren’t many bells and whistles, and that enables the company to keep its zero-commission policy.

Launched in 2015, Robinhood was created by a duo working in finance and living in California. Vladimir Tenev and Baiju Bhatt understood low trading costs, thanks to their involvement with high-frequency platforms. They also realized millennial investors burdened with student loans and other debt couldn’t really afford $500 account minimums and $10 trade commissions, so they launched Robinhood, a free trading platform with no minimums, no commissions, and no frills.

Robinhood offers a platform aimed at millennials and younger investors. There aren’t many bells and whistles, and that enables the company to keep its zero-commission policy.

Accounts are free because Robinhood has no overhead. There are no sales reps to pay, no research firms to fund, and no stores or offices to eat up costs.

Robinhood makes money in three ways:

  1. Interest on cash balances in accounts
  2. Premium package monthly fee (Robinhood Gold)
  3. Payment for over flow

There aren’t a lot of extras with Robinhood, but “free” is a hard price tag for competitors to beat. You’ll still get charts, news updates, and earnings reports too, although you’d be better off using Yahoo Finance (or something like it) if you want to do your own research.

Read Benzinga’s full Robinhood Review

Similarities

E-Trade and Robinhood are two unique companies, however, one similarity stands out for the two trading platforms. Both companies have realized the importance of mobile compatibility for online brokerages. The mobile apps are slick and make trading easy. Just a few taps and you can buy or sell stocks, ETFs or options contracts.

Key differences

E-Trade costs more to use, but the enhanced trading tools might be worth it for serious investors. There are a few more differences you could note:

  • E-Trade charges a commission on each trade you make, depending on the type of brokerage account you have. A commission of $4.95 is nearly the cheapest in the industry, but it’s still prohibitive for active traders with small account balances. On the flip side, everything is free on Robinhood. You can link your bank account and send money back and forth without ever paying a dime. The Robinhood Gold option for margin and extended hours trading does come with a monthly fee, however.
  • E-Trade offers a much larger variety of investible securities than Robinhood. Unlike its free competitor, E-Trade accounts have access to international stocks and mutual funds, futures contracts, bonds and OTC stocks. Robinhood limits you to mostly domestic equities and bond funds, but does offer the most in-demand ADR stocks.

  • Commission-free ETFs: Not every trade on E-Trade will cost you $7. Like its competitor TD Ameritrade, E-Trade offers 250 different commission-free ETFs, including Vanguard and iShares funds that can anchor your portfolio. You’ll get cheap index funds like Vanguard’s S&P 500 ETF (VOO) and Total Stock Market Index (VTI), sector funds like Vanguard Energy (VDE) and Healthcare Indices (VHT), and international funds like iShares Core MSCI Total International Stock (IXUS). You won’t pay a penny in commissions.
  • E-Trade is a one-stop shop for all your investment needs. You can open a taxable account or IRA, fund it with money from your E-Trade bank account, and trade using up-to-the-minute news and research. A professional advisor can also do it all for you. E-Trade is more expensive to use than Robinhood, but you do get a lot of bang for your buck.
  • The list of tradable securities on Robinhood is much smaller than E-Trade. You can add cryptocurrency and options to your portfolio, but there’s no way to buy futures contracts or mutual funds. Bonds can only be purchased through bond ETFs.

Final thoughts

For sophisticated investors looking for charting tools and expert advice, E-Trade is your best choice. However, if you’re looking to invest for cheap, you might be drawn to Robinhood. However, if E-Trade ever drops commissions, it might be a completely different story. 

Compare Online Brokers
Broker Commission Account Min Get Started

$6.95 for fewer than 30 trades/quarter. $0 Learn More

Flat-fee pricing: $5 per trade, Per-share pricing: $0.006-$0.01 per share ($1 minimum per trade) based on trading volume, Unbundled pricing: $0.002-$0.01 per share ($0.50-$1 minimum) based on trading volume $5,000 for individual retirement accounts (IRAs) Learn More

$4.95 volume discount available $0 Learn More

Free $0 Learn More

$0.005 per share minimum $1 and maximum 0.5% of trade value; volume discount available $0 for cash account, or a margin account with $2,000 Learn More